Local businesses feel the economic impact

Tourism is San Francisco's number one industry and our restaurants have received international acclaim, but as a new restaurant opened in the city, it found out its competitors are already noticing that consumers are tightening their belts.

"Have you ordered already? What are you having today?" asked a waiter. "I'm going to have the lobster roll," said a customer.

In the first hour of business for Nettie's Crab Shack on Union Street is going fairly well. Owners Annette Yang and Brian Leitner have worked in some of the Bay Area's best restaurants and they're not letting tough times impact their opening.

"We feel we're the perfect kind of restaurant to open in this economic environment which is a lower-priced, really reasonable, casual, warm restaurant," said Annette Yang.

The thinking has been that the San Francisco restaurant business is recession proof. The owners of Nettie's Crab Shack have created an affordable restaurant that doesn't cost anymore than what you would do at home.

They're launching at a time that is challenging. People are spending less and eating out less often.

"Unfortunately this year we've seen the highest level of food inflation or cost inflation we've seen in a long, long time," said Kevin Westlye, with the Golden Gate Restaurant Association. "It puts pressure on restaurants to raise menu prices at a time when the public is looking for deals in dining."

It's the perfect storm, according to restaurant consultant Frank Klein who owns Fish and Farm Downtown.

"A lot of smaller restaurants in particular, look for cash flow from those December private party bookings to help pay their bills or potential losses from softer times from July and August, and they're not getting that money," said Klein.

Restaurants in tourist areas like Union Square and Fisherman's Wharf are doing OK and places survive. Take for example, the Union Street institution, Perry's it is in its 40th year.

"We're doing very well. We've seen no drop off at all, but knock on wood, it makes me very nervous what's going on. You don't take anything for granted, but people are still going to go out," said Perry Butler, the owner of Perry's.

In good times and bad, in this business, success is the icing on the cake.